DG Anti Profiteering Vs Jyothi Theatre: GSTAT upholds anti-profiteering on cinema ticket GST rate reduction
Background and statutory context
The proceedings in DG Anti Profiteering Vs Jyothi Theatre arose from an investigation by the Director General of Anti-Profiteering (DGAP) under Section 171 of the Central Goods and Services Tax Act, 2017. The central issue was whether M/s Jyothi Theatre failed to pass on the benefit of reduction in GST rates on cinema admission tickets to its customers and thereby indulged in “profiteering”.
With the introduction of GST on 01.07.2017, cinema ticket admissions attracted:
- 28% GST for tickets priced at
Rs. 101or above per person per show, and - 18% GST for tickets priced at
Rs. 100or below.
Subsequently, vide Notification No. 27/2018-CT (Rate) dated 31.12.2018, the GST rates on admission to cinema halls were reduced with effect from 01.01.2019 as follows:
- From 28% to 18% for tickets priced at
Rs. 101or more; - From 18% to 12% for tickets priced at
Rs. 100or less.
Under Section 171, any such reduction in tax rate must be passed on to the recipient by way of a commensurate reduction in prices. The controversy in this case revolved around whether Jyothi Theatre actually reduced the ticket prices or instead retained the economic benefit of the rate cut by altering the base prices.
Initiation of anti-profiteering proceedings
On 31.05.2019, the Principal Commissioner, Medchal Commissionerate, Hyderabad lodged an application before the Standing Committee on Anti-Profiteering, alleging that Jyothi Theatre had not passed on the GST rate reduction benefit to cinema-goers.
The matter was referred to the DGAP on 09.10.2019 for detailed investigation. The DGAP issued a notice dated 21.10.2019 calling for information and documents, followed by summons dated 16.01.2020 and 29.02.2020. The assessee submitted replies via letters and e-mails dated 20.12.2019, 23.01.2020 and 13.02.2020, but did not furnish the full information sought.
In parallel, the assessee challenged the DGAP’s notice and summons by filing Writ Petition (Civil) No. 2938/2020 before the Hon’ble Telangana High Court. That writ came to be disposed of by order dated 12.12.2023, paving the way for continuation of the investigation.
The DGAP thereafter submitted a detailed report dated 03.05.2024, supplemented by a corrigendum dated 04.06.2024. These reports were placed before the Competition Commission of India (CCI), which now exercises the former National Anti-Profiteering Authority’s adjudicatory role. CCI permitted the assessee and the applicant to file consolidated written submissions responding to the DGAP’s findings.
DGAP’s factual findings on pricing pattern
Ticket pricing before and after GST rate cut
The DGAP examined the pricing pattern for various ticket categories—family circle, balcony, first class and second class—both before and after the effective date of rate reduction.
For tickets of Rs. 100 or below (the 18% to 12% slab), the DGAP recorded that:
- The gross ticket prices remained unchanged at
Rs. 100,Rs. 80,Rs. 60andRs. 30(each inclusive ofRs. 3as “tax-free theatre maintenance charge”) before and after 01.01.2019. - Prior to 01.01.2019, GST @ 18% was levied on base prices of
Rs. 84.75,Rs. 67.80,Rs. 50.85andRs. 25.42for the four categories, respectively. - Post 01.01.2019, the assessee increased the base prices to
Rs. 89.29,Rs. 71.43,Rs. 53.57andRs. 26.79, and charged GST @ 12% thereon, keeping the same gross ticket value to the consumer.
Similarly, for the category impacted by the 28% to 18% reduction (in particular, higher-priced family circle tickets), the DGAP noted that the assessee raised the base prices of tickets in the post-rate-reduction period, even as the GST rate went down.
Method of quantification: 18% to 12% slab
For tickets previously taxable at 18% and then at 12%, the DGAP:
- Determined the commensurate base price that should have applied post-01.01.2019 to maintain the same gross price but reflect the lower GST rate.
- Compared this commensurate base price with the actual base price charged post-01.01.2019.
- Computed the excess base amount per ticket, and the excess GST collected on that excess amount.
- Multiplied the combined excess (base + tax) per ticket by the quantity sold from 01.01.2019 to 30.09.2019.
This computation, reflected in Tables A and B of the corrigendum, yielded a profiteered amount for the 18% to 12% segment, aggregating to Rs. 12,99,969.
Method of quantification: 28% to 18% slab
For ticket variants where the GST rate fell from 28% to 18%, the DGAP used an analogous approach:
- It determined what the commensurate base price should have been with the reduced GST rate while preserving the earlier gross price structure.
- It then measured the increment in base price post-rate cut and computed the quantum of excess charge (including 18% GST on such excess).
On this basis, the DGAP calculated a further profiteering of Rs. 6,86,671 for this category (as set out in Tables C and D).
Consolidated profiteering amount
Combining the figures for both rate reduction segments, the DGAP concluded that the assessee had profiteered to the tune of Rs. 19,86,640 during the investigation period 01.01.2019 to 30.09.2019.
The DGAP specifically held that:
- Despite the statutory reduction in GST rates, Jyothi Theatre did not reduce ticket prices paid by the recipients.
- Instead, it increased the base prices, thereby neutralising the tax benefit that should have flowed to consumers.
- The collection of
Rs. 3per ticket as “maintenance charges” formed part of the taxable value and was appropriately included in the computation for anti-profiteering purposes.
As the individual recipients of the benefit were not identifiable, the DGAP recommended that the entire profiteered sum be deposited in the Consumer Welfare Funds of the Centre and the State.
Assessee’s submissions and key contentions
Pursuant to show-cause notice dated 26.06.2024 from CCI, the assessee filed detailed written submissions on 03.11.2025 and 23.01.2026. The principal arguments were: